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Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares of the registrant’s common stock outstanding at May 2, 2025 was 62,320,133.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risk and uncertainties. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “would,” “continue,” “ongoing” or the negative of these terms or other comparable terminology. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, statements regarding future financial and operational performance; statements concerning growth strategies including acquisitions, extension of distribution channels and strategic relationships, product innovation, international expansion, customer growth and expansion, customer service initiatives, expectations regarding our acquisitions, expectations regarding contract size and increased focus on strategic products, expectations for hiring new talent; our ability to accurately forecast revenue and appropriately plan expenses and investments; the demand for and benefits from the use of our current and future solutions; market acceptance of our solutions; the impact of the macroeconomic environment on our business; and changes in the competitive environment in our industry and the markets in which we operate and our liquidity and capital resources. These statements are based upon our historical performance and our current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith beliefs and assumptions as of that time with respect to future events and are subject to risks and uncertainty. If any of these risks or uncertainties materialize or if any assumptions prove incorrect, actual performance or results may differ materially from those expressed in or suggested by the forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainty, and assumptions that are difficult to predict, including those identified below, under “Part II. Other Information, Item 1A. Risk Factors” and elsewhere herein. Forward-looking statements should not be read as a guarantee of future performance or results, and you should not place undue reliance on such statements. Furthermore, we undertake no obligation to revise or update any forward-looking statements for any reason, except as required by applicable law.

Unless the context otherwise requires, the terms “BlackLine, Inc.,” “BlackLine,” “the Company,” “we,” “us,” and “our” in this Quarterly Report on Form 10-Q refer to the consolidated operations of BlackLine, Inc. and its consolidated subsidiaries as a whole.

Item 1.    Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except shares and par values) 

			March 31, 2025						December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents			$	479,536					$	885,915
Marketable securities (amortized cost of $386,890 and $0 at March 31, 2025 and December 31, 2024, respectively)			386,945						—
Accounts receivable, net of allowances of $3,377 and $2,964 at March 31, 2025 and December 31, 2024, respectively			146,609						178,141
Prepaid expenses and other current assets			30,263						28,348
Total current assets			1,043,353						1,092,404
Capitalized software development costs, net			46,139						45,448
Property and equipment, net			14,273						11,840
Intangible assets, net			55,870						59,520
Goodwill			448,965						448,965
Operating lease right-of-use assets			26,818						22,772
Deferred tax assets, net			54,324						53,208
Other assets			91,406						90,879
Total assets			$	1,781,148					$	1,825,036
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable			$	3,959					$	8,463
Accrued expenses and other current liabilities			62,759						71,574
Deferred revenue, current			330,804						338,615
Finance lease liabilities, current			12						66
Operating lease liabilities, current			3,379						3,525
Convertible senior notes, net, current			229,379						—
Total current liabilities			630,292						422,243
Finance lease liabilities, noncurrent			49						53
Operating lease liabilities, noncurrent			24,645						20,283
Convertible senior notes, net, noncurrent			664,130						892,675
Deferred tax liabilities, net			4,335						4,532
Deferred revenue, noncurrent			1,265						1,390
Other long-term liabilities			2,711						708
Total liabilities			1,327,427						1,341,884
Commitments and contingencies (Note 13)
Redeemable non-controlling interest (Note 4)			35,818						36,483
Stockholders' equity:
Common stock, $0.01 par value, 500,000,000 shares authorized, 62,261,033 and 62,813,352 issued and outstanding at March 31, 2025 and December 31, 2024, respectively			623						628
Additional paid-in capital			461,570						495,391
Accumulated other comprehensive loss			(178)						(361)
Accumulated deficit			(44,112)						(48,989)
Total stockholders' equity			417,903						446,669
Total liabilities, redeemable non-controlling interest, and stockholders' equity			$	1,781,148					$	1,825,036

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

BlackLine, Inc. and its subsidiaries (the “Company” or “BlackLine”) provide intelligent financial accounting solutions delivered primarily as Software as a Service (“SaaS”). The Company’s solutions enable its customers to address various aspects of their critical processes, including financial close & consolidation, intercompany accounting, and invoice-to-cash.

The Company is a holding company and conducts its operations through its wholly-owned subsidiary, BlackLine Systems, Inc. (“BlackLine Systems”).

The Company is headquartered in Woodland Hills, California. The Company has other local offices in Pleasanton, California; New York, New York; and Westport, Connecticut, as well as international office locations in Australia, Canada, France, Germany, India, Japan, the Netherlands, Poland, Romania, Singapore, and the United Kingdom.

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the Securities and Exchange Commission (“SEC”) on February 21, 2025. The unaudited condensed consolidated financial statements are unaudited and have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair statement of the unaudited condensed consolidated financial statements. The unaudited condensed consolidated balance sheet at December 31, 2024 was derived from audited financial statements, but does not include all disclosures required by GAAP. The operating results for the quarter ended March 31, 2025 are not necessarily indicative of the results expected for the full year ending December 31, 2025.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.

On an ongoing basis, management evaluates its estimates, primarily those related to determining the stand-alone selling price for separate deliverables in the Company’s subscription revenue arrangements, allowance for doubtful accounts, cancellations and credits, fair value of assets and liabilities assumed in a business combination, recoverability of goodwill and long-lived assets, useful lives associated with long-lived assets and right-of-use assets, income taxes, contingencies, fair value of the 0.00% Convertible Senior Notes due in 2026 and 1.00% Convertible Senior Notes due in 2029, redemption value of redeemable non-controlling interest, and the valuation and assumptions underlying stock-based compensation. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances. Actual results could differ from those estimates.

The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company at March 31, 2025 and through the date of this report. The accounting matters assessed included, but were not limited to, the allowance for credit losses and the carrying value of goodwill and other long-lived assets. While there was not a material impact to the Company’s unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, the Company’s future assessment of these accounting matters and other factors could result in material impacts to the Company’s consolidated financial statements in future reporting periods.

The Company’s significant accounting policies are detailed in “Note 2 - Basis of Presentation, Significant Accounting Policies, and Recently-Issued Accounting Pronouncements” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to the Company’s significant accounting policies.

There have been no recently-adopted accounting pronouncements since the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ("ASU 2025-01"). ASU 2024-03 requires public companies to disclose, in interim and reporting periods, additional information about certain expenses in the financial statements. For public business entities, ASU 2024-03, as clarified by ASU 2025-01, is effective for the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. The Company is currently evaluating the impact that the standard will have on our disclosures within our consolidated financial statements. The Company does not intend to early adopt.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. For public business entities, it is effective for annual periods beginning after December 15, 2024. The adoption of this standard only impacts annual disclosures and is not expected to have a material impact on the Company’s consolidated financial statements.

Management has determined that the Company has one operating and reportable segment. The Company provides subscription and support services that consist of a cloud-based platform designed to unify, automate, and streamline accounting and finance operations, and also provides professional services that consist of implementation and consulting services. The technology used in the subscription and support services is based on a single software platform that is deployed to and implemented by customers. The Company manages the business activities on a consolidated basis, and operating segments have not been aggregated. The accounting policies of the operating segment are the same as those described in “Note 2 - Basis of presentation, significant accounting policies, and recently-issued accounting pronouncements” included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Our Chief Operating Decision Maker (“CODM”) assesses performance for the operating segment and decides how to allocate resources based on the review of net income. The CODM uses net income, among other measures, for budgeting and resource allocation purposes. Expenses significant to the segment were determined to be cost of revenues, sales and marketing expenses, research and development expenses, general and administrative expenses, interest expense, and the provision for income taxes, which are all presented in the unaudited condensed consolidated statements of operations for the quarters ended March 31, 2025 and 2024. Other significant expenses include depreciation expense of $7.8 million and $7.5 million for the quarters ended March 31, 2025 and 2024, respectively, as well as amortization expense of $3.7 million and $5.2 million for the quarters ended March 31, 2025 and 2024, respectively.

The Company’s intra-entity sales are eliminated upon consolidation.

The Company disaggregates its revenue from contracts with customers by geographic location, as it believes it best depicts how the nature, amount, timing, and uncertainty of its revenues and cash flows are affected by economic factors.

The following table sets forth the Company’s revenues by geographic region (in thousands):

No countries outside the U.S. represented 10% or more of total revenues.

The measure of segment assets is reported on the unaudited condensed consolidated balance sheets as total consolidated assets. The following table sets forth the Company’s long-lived assets, which consist of property and equipment, net, and operating lease ROU assets by geographic region (in thousands):

In September 2018, the Company entered into an agreement with Japanese Cloud Computing and M30 LLC (the “Investors”) to engage in the investment, organization, management, and operation of BlackLine K.K. that is focused on the sale of the Company's products in Japan. The Company initially contributed approximately $4.5 million in cash in exchange for 51% of the outstanding common stock of BlackLine K.K. and subsequently invested a further $2.3 million, maintaining the Company's majority ownership of 51%. As the Company continues to control a majority stake in BlackLine K.K., the entity has been consolidated.

All of the common stock held by the Investors is callable by the Company beginning September 3, 2025, or puttable by the Investors upon certain contingent events. Should the call or put option be exercised, the redemption value will be determined based upon a prescribed formula derived from the discrete revenues of BlackLine K.K. and the Company, and may be settled, at the Company’s discretion, with Company stock or cash. As a result of the put right available to the Investors in the future, the redeemable non-controlling interest in BlackLine K.K. is classified outside of permanent equity in the Company’s consolidated balance sheets, and the balance is reported at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest's share of earnings, or its estimated redemption value. The resulting changes in the estimated redemption amount are recorded within retained earnings or, in the absence of retained earnings, additional paid-in capital.

Activity in the redeemable non-controlling interest was as follows (in thousands):

The carrying value of intangible assets was as follows (in thousands):

The following table represents the changes in goodwill (in thousands):

At March 31, 2025, investments in marketable securities presented within current assets on the unaudited condensed consolidated balance sheets consisted of the following (in thousands):

The Company had no marketable securities at December 31, 2024.

The Company’s marketable securities at March 31, 2025 have a contractual maturity of less than one year. All of our available-for-sale securities are available for use in our current operations and are categorized as current assets. Refer to “Note 7 - Fair Value Measurements” for additional information.

The Company recognized accretion on its marketable securities of $2.0 million in interest income for the quarter ended March 31, 2025. The Company recognized accretion on its marketable securities in interest income, and also recognized net gains and losses related to maturities of marketable securities that were reclassified from accumulated other comprehensive loss in interest income of $8.5 million for the quarter ended March 31, 2024.

Net gains and losses are determined using the specific identification method. During the quarters ended March 31, 2025 and 2024, there were no realized gains and losses related to sales of marketable securities recognized in the Company's unaudited condensed consolidated statements of operations.

Marketable securities in a continuous loss position for less than 12 months had an estimated fair value of $87.2 million at March 31, 2025, and unrealized losses were nominal at March 31, 2025. There were no marketable securities in a continuous loss position for greater than 12 months at March 31, 2025.

The Company's marketable securities are considered to be of high credit quality and accordingly, there was no allowance for credit losses related to marketable securities at March 31, 2025.

Deferred customer contract acquisition costs are included in other assets in the unaudited condensed consolidated balance sheets and totaled $86.5 million and $86.1 million at March 31, 2025 and December 31, 2024, respectively.

Accrued expenses and other current liabilities were comprised of the following (in thousands):

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis by level, within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement (in thousands):

The Company classified the marketable debt securities as available-for-sale debt securities at the time of purchase and reevaluated such classification at each balance sheet date. The valuation techniques used to measure the fair values of our instruments that were classified as Level 1 were derived from quoted market prices for identical instruments in active markets. The valuation techniques used to measure the fair values of Level 2 instruments were derived from broker reports that utilized quoted market prices for similar instruments.

At March 31, 2025, the Company had $675.0 million aggregate principal amount of our 1.00% 2029 Notes (the “2029 Notes” and, together with the 2026 Notes (as defined below), the “Notes”) outstanding. The 2029 Notes consisted of the following (in thousands):

The effective interest rate of the 2029 Notes, excluding the conversion option, was 1.40% at March 31, 2025.

The Company carries the 2029 Notes at face value less unamortized debt issuance costs on the unaudited condensed consolidated balance sheets and presents the fair value for disclosure purposes only. The estimated fair value was determined based on the actual bids and offers of the 2029 Notes in an over-the-counter market on the last trading day of the period. The estimated fair value of the 2029 Notes, based on a market approach at March 31, 2025, was approximately $668.7 million, which represents a Level 2 valuation.

During the quarter ended March 31, 2025, the Company recognized $0.6 million of interest expense related to the amortization of debt issuance costs and $1.7 million of coupon interest expense.

The 2029 Notes were not convertible at March 31, 2025. It is the Company’s current intent to settle conversions of the 2029 Notes through “combination settlement”, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares, cash, or a combination for any further value.

In connection with the offering of the 2029 Notes, the Company entered into privately-negotiated capped call transactions (the “2029 Capped Calls” and together with the 2026 Capped Calls (as defined below), the “Capped Calls”). There have been no changes to the condition of the 2029 Notes since December 31, 2024, and the 2029 Capped Calls were unchanged and still outstanding at March 31, 2025.

At March 31, 2025, the Company had $230.2 million aggregate principal amount of our 0.00% 2026 Notes (the “2026 Notes”) outstanding. The 2026 Notes consisted of the following (in thousands):

(1) Net carrying amount at March 31, 2025 presented within total current liabilities on the unaudited condensed consolidated balance sheets.

The effective interest rate of the 2026 Notes, excluding the conversion option, was 0.37% at March 31, 2025.

The Company carries the 2026 Notes at face value less unamortized debt issuance costs on the unaudited condensed consolidated balance sheets and presents the fair value for disclosure purposes only. The estimated fair value was determined based on the actual bids and offers of the 2026 Notes in an over-the-counter market on the last trading day of the period. The estimated fair value of the 2026 Notes, based on a market approach at March 31, 2025, was approximately $221.0 million, which represents a Level 2 valuation.

During the quarters ended March 31, 2025 and 2024, the Company recognized interest expense related to the amortization of debt issuance costs of $0.2 million and $1.1 million, respectively.

The 2026 Notes were not convertible at March 31, 2025. It is the Company’s current intent to settle conversions of the 2026 Notes through “combination settlement”, which involves repayment of the principal portion in cash and any excess of the conversion value over the principal amount in shares, cash, or a combination for any further value.

In connection with the offering of the 2026 Notes, the Company entered into privately-negotiated capped call transactions (the “2026 Capped Calls”). There have been no changes to the condition of the 2026 Notes since December 31, 2024, and the 2026 Capped Calls were unchanged and still outstanding at March 31, 2025.

On March 4, 2025, the Company announced a restructuring program that reduced its global workforce by approximately 7%, or 130 total positions. All of the actions are part of ongoing organizational alignment and performance management initiatives as the Company continues to focus on key strategic priorities.

In connection with the restructuring program, the Company currently estimates that it will incur expenses of up to $6.0 million, primarily for severance and other termination benefits. The Company expects to recognize these anticipated expenses primarily during the first and second quarters of fiscal year 2025, and to have substantially completed the planned actions during fiscal 2025, subject to local law and regulatory requirements, which may extend the process in certain countries.

During the quarter ended March 31, 2025, the Company recorded $5.3 million for one-time termination benefits related to the Fiscal 2025 restructuring program, which occurred in the United States and various international locations. The charges were recorded pursuant to ASC 420, Exit or Disposal Obligations.

The liability for the Fiscal 2025 restructuring program was included in accrued expenses and other current liabilities in the unaudited condensed consolidated balance sheets, and the following table summarizes the related activity for the quarter ended March 31, 2025 (in thousands):

Accrual balance at December 31, 2024						$	—
Restructuring charges						5,299
Cash payments						(628)
Accrual balance at March 31, 2025						$	4,671

Stock-based compensation expense was as follows (in thousands):

For the quarters ended March 31, 2025 and 2024, stock-based compensation capitalized as an asset was $0.9 million and $0.9 million, respectively.

The following table summarizes activity for awards that contain service-only vesting conditions (in thousands):

The following table summarizes activity for restricted stock units that contain service-only vesting conditions (in thousands):

The following table summarizes activity for restricted stock units with performance and service vesting conditions with grant dates established (in thousands):

The following table summarizes activity for restricted stock units with performance and service vesting conditions with no grant dates established (in thousands):

The following table summarizes activity for restricted stock units with market and service-based conditions (in thousands):

On November 17, 2024, the Company's Board of Directors authorized the repurchase of up to $200.0 million of the Company’s common stock. During the quarter ended March 31, 2025, the Company repurchased and retired approximately 0.9 million shares of common stock for $45.5 million as part of the share repurchase program under which approximately $154.5 million of buyback capacity remained at March 31, 2025.

In determining quarterly provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date income, adjusted for discrete items arising in that quarter. The Company’s annual estimated effective tax rate differs from the United States (“U.S.”) federal statutory rate of 21% primarily as a result of non-deductible officer compensation, stock-based compensation shortfalls, foreign taxes, and changes in the Company’s valuation allowance for income taxes.

For the quarters ended March 31, 2025 and 2024, the Company recorded income tax expense of $4.7 million and $0.9 million, respectively. The increase in income tax expense for the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024, resulted primarily from stock-based compensation shortfalls for the quarter ended March 31, 2025, along with changes in valuation allowance and changes in the mix of profitable foreign jurisdictions.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share amounts):

The Company computes basic earnings per share attributable to BlackLine, Inc. using the weighted average number of common shares outstanding. The Company computes diluted earnings per share attributable to BlackLine, Inc. using the weighted average number of common shares outstanding plus the effect of potentially dilutive shares, which is based on the weighted-average shares of common stock underlying stock options and unvested stock awards using the treasury stock method, and the effect of the convertible senior notes using the if-converted method. For the quarter ended March 31, 2025, diluted earnings per share attributable to BlackLine, Inc. excludes the impact of the 2029 Notes as their inclusion would have been antidilutive.

The weighted average impact of potentially dilutive securities that were excluded from the diluted per share calculations because they were anti-dilutive were as follows (in thousands):

The denominator for diluted net income per share attributable to BlackLine, Inc. does not include any effect from the Capped Calls as this effect would be anti-dilutive. In the event of conversion of the Notes, shares delivered to the Company under the Capped Calls would offset the dilutive effect of the shares that the Company would issue under the Notes. Refer to “Note 8 - Convertible Senior Notes” for additional information on the Notes and the related Capped Calls.

Litigation—From time to time, the Company may become subject to legal proceedings, claims, and litigation arising in the ordinary course of business. The Company is not currently a party to any legal proceedings, nor is it aware of any pending or threatened litigation that would have a material adverse effect on the Company’s business, operating results, cash flows, or financial condition should such litigation be resolved unfavorably.

Indemnification—In the ordinary course of business, the Company may provide indemnification of varying scope and terms to customers, vendors, investors, directors, and officers with respect to certain matters, including, but not limited to, losses arising out of its breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties. These indemnification provisions may survive termination of the underlying agreement and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions may not be subject to maximum loss clauses. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is indeterminable. The Company has never paid a material claim, nor has it been sued in connection with these indemnification arrangements. At March 31, 2025 and December 31, 2024, the Company has not accrued a liability for these indemnification arrangements because the likelihood of incurring a payment obligation, if any, in connection with these indemnification arrangements was not probable or reasonably estimable.

Revenue totaling $138.4 million and $129.6 million was recognized during the quarters ended March 31, 2025 and 2024, respectively, that was previously included in the deferred revenue balance at December 31, 2024 and 2023, respectively.

Contracted but unrecognized revenue was $913.2 million at March 31, 2025, of which the Company expects to recognize approximately 56% over the next 12 months and the remainder thereafter.

On April 2, 2025, the Compensation Committee of the Board of Directors of BlackLine, Inc. approved restricted stock unit grants totaling 1.7 million shares. Each restricted stock unit entitles the recipient to receive one share of common stock upon vesting of the award. The majority of the restricted stock units will vest as to one-fourth of the total number of units awarded on the first anniversary of February 20, 2025 and quarterly thereafter for 12 consecutive quarters.

On April 2, 2025, the Compensation Committee approved grants of performance and service-based restricted stock units totaling 0.2 million target shares. Once specified performance metrics are met, each performance stock unit entitles the recipient to receive one share of common stock upon vesting of the award. The performance and service-based restricted stock units will vest as to one-third of the total number of units awarded equally over the next three years. Grant dates will be established upon approval of the performance metrics for the respective years of the performance period, and the grant-date fair value per share will be equal to the closing price on the grant date for each tranche.

On April 2, 2025, the Compensation Committee approved grants of market and service-based restricted stock units totaling 0.2 million target shares. The awards are tied to relative total shareholder return measured over a three-year performance period with vesting occurring in February of the year following the end of the performance period. Grant dates were established upon award approval, and the grant-date fair value per share was estimated using the Monte Carlo valuation simulation model that incorporates various assumptions, including stock price volatility, risk-free interest rate, and the performance of our stock price relative to the applicable peer group.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations We provide a unified, scalable, and flexible platform tailored to the evolving needs of the Office of the Chief Financial Officer (“CFO”) and deliver purpose-built applications that address critical processes, including financial close & consolidation, intercompany accounting, and invoice-to-cash. Our software and services provide the critical technology and industry-leading practices that deliver accurate, efficient, and intelligent financial operations. We are a holding company and conduct our operations through our wholly-owned subsidiary, BlackLine Systems.

At March 31, 2025, we had 393,892 individual users across 4,455 customers. Additionally, we continue to build strategic relationships with technology vendors, professional services firms, business process outsourcers, and resellers.

Our cloud-based solutions, increasingly powered by our BlackLine Studio360 Platform, include Account Reconciliations, Transaction Matching, Task Management, Financial Reporting Analytics, Journal Entry, Variance Analysis, Compliance, Smart Close for SAP, Cash Application, Credit & Risk Management, Collections Management, Disputes & Deductions Management, Team & Task Management, AR Intelligence, Electronic Invoicing & Payments, Intercompany Create, Intercompany Balance & Resolve, and Intercompany Net & Settle. These applications address many use cases across our customers’ financial operations and include comprehensive and flexible solutions that deliver best practices for end-to-end record-to-report and invoice-to-cash processes.

We derived approximately 95% of our revenue from subscriptions to our cloud-based software platform and approximately 5% from professional services for the quarter ended March 31, 2025. Our subscription contracts have initial non-cancellable terms of one year to three years with renewal options. The majority of new contracts in 2024 and during the quarter ended March 31, 2025 had an initial non-cancellable term of three years. We have updated our subscription pricing models to address the value of BlackLine solutions based on a number of factors, including customer size, the products involved in delivering our solutions, and volumetrics, such as transactions or entities. We typically invoice customers annually in advance for subscriptions, which is initially recorded as deferred revenue and recognized ratably over the term of the customer contract. The first year of subscription fees are typically payable within 30 days after execution of a contract, and thereafter upon renewal.

Professional services consist primarily of implementation and consulting services. With the exception of our intercompany accounting solutions acquired as part of our acquisition of FourQ Systems, Inc. (“FourQ”), our product offerings are available for immediate use on our platform after granting access to a new customer. We typically help customers implement our solutions, and we also provide consulting services to help customers optimize the use of our products. We invoice customers for our consulting services on a time-and-materials basis and recognize that revenue as services are performed. A limited number of our customers are provided professional services for a fixed fee, for which we invoice in advance. The fee is initially recorded as deferred revenue and recognized on a proportional-performance basis as the services are rendered.

We sell our solutions primarily through our direct sales force, which leverages our relationships with technology vendors, professional services firms and business process outsourcers. In particular, our solution integrates with SAP’s enterprise resource planning (“ERP”) solutions, and SAP is part of the reseller channel that we use in the ordinary course of business. SAP has the ability to resell our solutions as SAP solution-extensions (“SolEx”), for which we receive a percentage of the revenues. We also have an agreement with Google Cloud in which we collaborate with them on joint selling and go-to-market activities and bring enhanced automation solutions for finance and accounting to new and existing customers.

Our ability to maximize the lifetime value of our customer relationships will depend, in part, on the willingness of customers to purchase additional user licenses and products from us. We rely on our sales and customer success teams to support and grow our existing customers by maintaining high customer satisfaction and educating customers on the value all our products provide.

The length of our sales cycle depends on the size of a potential customer and contract, as well as the type of solution or product being purchased. The sales cycle for our global enterprise customers is generally longer than that of our mid-size customers. In addition, the length of the sales cycle tends to increase for larger contracts and for more complex, strategic products like Intercompany Financial Management. As we continue to focus on increasing our average contract size and selling more strategic products, we expect our sales cycle to lengthen and become less predictable, which could cause variability in our results for any particular period.

We have historically signed a high percentage of agreements with new customers, as well as renewal agreements with existing customers, in the fourth quarter of each year and usually during the last month of the quarter. This can be attributed to buying patterns typical in the software industry. As the terms of most of our customer agreements are measured in full year increments, agreements initially entered into during the fourth quarter or last month of any quarter will generally come up for renewal at that same time in subsequent years.

This seasonality is reflected in our revenues, though the impact to overall annual or quarterly revenues is nominal due to the fact that we recognize subscription revenue ratably over the term of the customer contract.

For the quarters ended March 31, 2025 and 2024, we had revenues totaling $166.9 million and $157.5 million, respectively. We generated net income attributable to BlackLine, Inc. of $6.1 million and $10.8 million for the quarters ended March 31, 2025 and 2024, respectively.

Our operating results may vary based on the impact of changes in our industry or the global economy on us or our customers. General macroeconomic conditions, such as a recession, inflation or rising interest rates, an economic downturn in the United States (“U.S.”) or internationally, adverse business conditions and liquidity concerns, or bank failures or instability in the financial services sector, has and could continue to adversely affect demand for our products and make it difficult to accurately forecast and plan our future business activities. As a result of economic uncertainty, we have seen customers delay and defer purchasing decisions, which has adversely impacted our near-term demand.

On March 4, 2025, we announced a restructuring program that was designed to reduce our global workforce by approximately 7%, or 130 total positions. All of the actions are part of ongoing organizational alignment and performance management initiatives as we continue to focus on key strategic priorities. Refer to "Note 9 - Restructuring Costs" in our condensed consolidated financial statements for additional information on this program.

We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions.

Dollar-based net revenue retention rate. We believe that dollar-based net revenue retention rate is an important metric to measure the long-term value of customer agreements and our ability to retain and grow our relationships with existing customers over time. We calculate dollar-based net revenue retention rate as the implied monthly subscription and support revenue at the end of a period for the base set of customers from which we generated subscription revenue in the year prior to the calculation, divided by the implied monthly subscription and support revenue one year prior to the date of calculation for that same customer base. This calculation does not reflect implied monthly subscription and support revenue for new customers added during the one-year period but does include the effect of customers who terminated during the period. We define implied monthly subscription and support revenue as the total amount of minimum subscription and support revenue contractually committed to, under each of our customer agreements over the entire term of the agreement, divided by the number of months in the term of the agreement. At March 31, 2025, our dollar-based net revenue retention rate increased from the year ended December 31, 2024 due to a higher rate of acquiring customer accounts and the impact of favorable foreign exchange rates. Our ability to maximize the lifetime value of our customer relationships will depend, in part, on the willingness of the customer to purchase additional user licenses and products from us. We rely on our customer success and sales teams to support and grow our existing customers by maintaining high customer satisfaction and educating the customer on the value our products provide.

Number of customers. We believe that our ability to expand our customer base is an indicator of our market penetration and the growth of our business. We define a customer as a company that contributes to our subscription and support revenue as of the measurement date. In situations where an organization has multiple subsidiaries or divisions, each entity that is invoiced as a separate entity is treated as a separate customer. However, where an existing customer requests its invoice be divided for the sole purpose of restructuring its internal billing arrangement without any incremental increase in revenue, such customer continues to be treated as a single customer. For the quarters ended March 31, 2025 and 2024, no single customer accounted for more than 10% of our total revenues.

Number of users. Since our customers generally pay fees based on the number of users on our platform within their organization, we believe the total number of users is an indicator of the growth of our business. While the fees for the majority of the products we sell are user-based, we anticipate that we will see a higher volume of transactions based on our updated pricing models that are based on additional factors, including customer size, product mix, and volumetrics, such as transactions or entities.

In addition to our results determined in accordance with GAAP, we believe the non-GAAP measures below are useful to us and our investors in evaluating our business. These non-GAAP financial measures are useful because they provide consistency and comparability with our past performance, facilitate period-to-period comparisons of operations and facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

Non-GAAP Gross Profit and Non-GAAP Gross Margin. Non-GAAP gross profit is defined as GAAP revenues less GAAP cost of revenue adjusted for amortization of acquired developed technology, stock-based compensation, and transaction-related costs (including, but not limited to, accounting, legal, and advisory fees related to the transaction, as well as transaction-related retention bonuses). Non-GAAP gross margin is defined as non-GAAP gross profit divided by GAAP revenues. We believe that presenting non-GAAP gross profit and non-GAAP gross margin is useful to investors as it eliminates the impact of certain non-cash expenses and allows a direct comparison between periods.

Non-GAAP Income from Operations and Non-GAAP Operating Margin. Non-GAAP income from operations is defined as GAAP income from operations adjusted for amortization of intangible assets, stock-based compensation, change in fair value of contingent consideration, transaction-related costs, legal settlement gains or costs, and restructuring costs. Non-GAAP operating margin is defined as non-GAAP income from operations divided by GAAP revenues. We believe that presenting non-GAAP income from operations and non-GAAP operating margin is useful to investors as it eliminates the impact of items that have been impacted by our acquisitions and other related costs in order to allow a direct comparison of income from operations between all periods presented.

Non-GAAP Net Income Attributable to BlackLine and Diluted Non-GAAP Net Income Per Share Attributable to BlackLine, Inc. Non-GAAP net income attributable to BlackLine is defined as GAAP net income attributable to BlackLine adjusted for the impact of the provision for (benefit from) income taxes related to acquisitions, amortization of intangible assets, stock-based compensation, amortization of debt issuance costs from our 0.00% Convertible Senior Notes due in 2026 (the “2026 Notes”) and 1.00% Convertible Senior Notes due in 2029 (the “2029 Notes” and, together with the 2026 Notes, the “Notes” or “convertible senior notes”), change in fair value of contingent consideration, transaction-related costs, legal settlement gains or costs, restructuring costs, adjustment to the redeemable non-controlling interest to the redemption amount, and gain on extinguishment of convertible senior notes.

Diluted non-GAAP net income per share attributable to BlackLine, Inc. includes the adjustment for shares resulting from the elimination of stock-based compensation. We believe that presenting non-GAAP net income attributable to BlackLine is useful to investors as it eliminates the impact of items that have been impacted by our acquisitions and other related costs to allow a direct comparison of net income between all periods presented.

The following table presents a reconciliation of gross profit, gross margin, operating income, operating margin, and net income, the most comparable GAAP measures, to non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, and non-GAAP net income:

The following table sets forth our statements of operations information for each of the periods indicated:

The increase in revenues for the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024, was primaril driven by revenue from existing customers, which also grew from additional users and product expansion. The total number of customers and users at March 31, 2025, increased by 1% and 2%, respectively, as compared to March 31, 2024.

The increase in total cost of revenues for the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024, was primarily due to the following:

•$1.2 million increase in computer software expenses due to higher spend on cloud hosting services as customers continue to migrate to the Google Cloud Platform (“GCP”), as well as upgrades to support business growth;

•$1.0 million increase in amortization of developed technology due to net additions to software placed into service; and

•$0.8 million increase primarily driven by the issuance of equity grants made after the quarter ended March 31, 2024 that contributed to a higher baseline of recurring expense for the quarter ended March 31, 2025; partially offset by

•$0.7 million decrease in depreciation and amortization due to certain assets being fully amortized.

The increase in sales and marketing expenses for the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024, was primarily due to the following:

•$2.3 million increase in employee compensation and benefits primarily due to an increase in average headcount and average compensation per employee;

•$0.4 million increase in employee events;

•$0.3 million increase in digital marketing expenses, partially offset by the timing of our international BeyondTheBlack event; and

•$0.3 million increase in computer software expenses to support internal automation and scalability initiatives; partially offset by

•$1.4 million decrease in depreciation and amortization due to certain assets being fully amortized.

The increase in research and development expenses for the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024, was primarily due to the following:

•$1.5 million increase in employee compensation and benefits primarily due to an increase in average headcount, partially offset by a decrease in average compensation per employee; partially offset by

•$0.5 million increase in capitalized software costs primarily due to required updates to access new markets, and ongoing development of cloud-based and new solution offerings. Collectively, these increases resulted in a decrease in net expenses; and

•$0.4 million decrease in professional fees.